New York antitrust suit accuses Intel of bribery

New York Attorney General Andrew M. Cuomo filed a federal antitrust lawsuit Wednesday against Intel that accuses it of paying computer makers rebates to illegally maintain its monopoly power, the newest among several such attacks that have dogged the chipmaker in recent years.

"Intel has engaged in a systematic worldwide campaign of illegal, exclusionary conduct to maintain its monopoly power and prices in the market for x86 microprocessors," the suit asserts. "By exacting exclusive or near-exclusive agreements from large computer makers in exchange for payments totaling billions of dollars, and threatening retaliation against any company that did not heed its wishes, Intel robbed its competitors of the opportunity to challenge Intel's dominance in key segments of the market. This illegal behavior was highly detrimental to consumers, competition, and innovation."

The suit "seeks to bar further anticompetitive acts by Intel, restore lost competition, recover monetary damages suffered by New York governmental entities and consumers, and collect penalties," Cuomo said in a statement.

The suit (click for PDF) makes the state the newest party to go after the dominant chipmaker. Intel also is in the midst of an antitrust suit brought by top rival AMD in 2005 and appealing a massive $1.5 billion fine from the European Commission from a later case in the European Union.

New York Attorney General Andrew M. Cuomo

(Credit: New York Office of the Attorney General)

Intel will defend itself, Intel spokesman Chuck Mulloy said in response to the New York suit.

"We disagree with the New York attorney general. Neither consumers--who have consistently benefited from lower prices and increased innovation--nor justice are being served by the decision to file this case now," Mulloy said.

Of e-mails the attorney general quoted as evidence Intel abused its position, all already emerged in earlier cases, he added. "It is the AMD case filed 4.5 years ago. It's the same case the EU brought. There's nothing significant or new here that hasn't been discovered," Mulloy said.

According to the suit, computer makers "frequently decided, when faced with the array of incentives and threats which Intel brought to bear, to collaborate with Intel in restricting their purchases from AMD."

"In a February 27, 2003 internal Dell document, for example, it was assumed that 'aggressive' purchases by Dell from AMD could result in '(r)etaliatory (rebate) reductions (by Intel that) could be severe and prolonged with impact to all LOBs (lines of business),'" the suit said. "Another Dell document from March 2003 concluded that '(a)nticipated Intel response wipes out all potential opinc (operating income) upside from going with AMD.'"

And an unnamed IBM executive said in a 2005 e-mail that balancing business interests against Intel's response was hard. From the suit:

I understand the point about the accounts wanting a full AMD portfolio. The question is can we afford to accept the wrath of Intel if we do the AMD full portfolio? It is a very hard question to deal with. On the one hand, having Intel help us has been one element of why we are doing better in the market. If they start to sell against us again I am afraid that we would be in a very difficult spot. On the other hand, if we leave Sun and HP an opening with AMD we will (be) very exposed on that side of things.

Cuomo's office said it began investigating the case in January 2008, "reviewed millions of pages of documents and e-mails and took testimony from several dozen witnesses."

Updated 9:43 a.m. PST with further details from the lawsuit.

[cary1]

Is that why Apple doesn't use AMD processors?

[cloudmatt]

probably...and apple likes to keep the supported hardware low to help streamline the os.

[slickuser]

This guy wouldn't care if AMD wasn't building a fab in NY.

Everyone has vested interests...

[Shankland]

Rarely does one single factor entirely steer a computer maker's thinking. Intel at present is much more competitive in laptops when it comes to performance and power consumption, and Apple prefers a minimalist product line. If it had as many laptop and desktop models as, say, HP or Dell, it might be more willing to cherry-pick AMD processors for one price point or another. In particular for Apple, which writes its own operating system and designs its own hardware, using multiple processor vendors adds significant cost and support complexity.

Curiously, Since Apple doesn't accept Intel marketing money in exchange for those "Intel inside" stickers that are so common on laptops, the company probably doesn't feel as drawn by Intel's joint marketing financial incentives as most other companies. Apple likes to own its own brand, relegating the processor to a subordinate role.

Why isn't somebody going after Microsoft?

They set the bar for this sort of marketing.

[SactoGuy018]

It will be VERY interesting to see what kind of injunctive relief Cuomo wants. Will it be another big fine? A ban on exclusive or preferential contracts with system builders like Dell or HP? A requirement that Intel provide information on its CPU and motherboard chipset technology to others?

[cloudmatt]

ahh the first of many to follow. Here we go with a US suit so hopefully no mention of big bad foreign interests pulling unjustified actions. Intel has been getting away with this far to long and I don't care if your an amd or intel fan the fact is regardless of who makes the best chip competition moves technology forward and Intel has done everything to stay on top with out having to have the chops to back it up. Intel will most likely survive after all the dust settles, a little worse for the wear but still a big player.

Attention AMD! If you have something big up your sleeve now is the time to prep, produce and release your next barn buster. I have faith you were the better chip before and you can do it again.

[slickuser]

yeah sure, the one-hit wonder may strike again. only if they could keep-up with Intel's tick-tock tick-tock..

that would be never..

dream on!

Meanwhile, whine and complain to all governments and AMD may get some money...

[cloudmatt]

@slick

Miss the point much? I don't care who you like and I'm sure you don't care who I like. There is proof on the table that shows Intel was stunting the market. by doning so (regardless of who has the better chip) they didn't have to strive as hard to to keep ahead of the competition. Thus your chip is not as good as it could have been had there been a fair market. love or hate AMD if it wern't for them you might not have some of the tech in your Intel chip.

as for me, so what if I am an AMD fan and wish them well they have a solid product at a great price you don't like them don't buy them but respect the fact that they are the pressure that should drive your Intel chips to even better standards.

[slickuser]

if it wasn't Intel, AMD would have been in x86 business... its just competition. stop whining and try to repeat
your one-hit success!

[cloudmatt]

here is more on the story.
http://tech.yahoo.com/news/ap/20091104/ap_on_hi_te/us_intel_antitrust

[Mergatroid Mania]

@slickuser

One hit wonder? You should check out your history a little more buddy. If it wasn't for AMD there wouldn't even be an X86 architecture any more.

[TheGoBetween]

I thought this was common knowledge back during the chip wars.

[svgtom]

Here goes Andy Cuomo again, trying to make name for himself on the national level and becoming a big bully in the process, not unlike his predecessor, the egotistical maniac, Eliot Spitzer.

[thejoemisster]

New York is broke. There bowling for $$$$....

Boston's pretty broke, too. Maybe we should follow suit with this one, lol. I jest

[sharmajunior]

California is the brokest (I know its not a real word), they should take up all of Intel's money or kick them out of the state in that case.

[Dchow]

Your all forgetting that Intel has been producing the Top of the line chips for years. AMD has always lagged behind in quality and speed. They may have had 1 or 2 "better" chips for a few months or so but Intel was always right there with them or way ahead. If any company should be to blame for lack of competition or options it would be Microsoft. They produce garbage year after year but yet are successful because we have little to no choice, unless you do Apple or Linux/UNix/etc.... . Intel has spent Billions on making the best there is and if Dell wasn't so greedy for customers and money then it wouldn't be influenced by Intel's marketing rebates and such. How any of this affected me as a consumer in NY I have no idea as I can spend as much or as little as I want for a PC regardless of whether AMD or Intel is inside.

[theboyr]

This probably has nothing to do at all to do with AMD opening up a huge plant outside of Albany.

[AluminumMonster]

The damage is already done, and AMD isnt going to get a second wind. The DOJ is just punishing Intel, which i could care less if they do or dont. Intel will be Intel win or lose this case, and they will still control almost all of the CPU market. Besides this case wont be resolved till 2030.

[mssoot]

Yea, and when they finally do, guess who is going to end up footing the bill in the final scheme if things, future consumers, thats who. AMD cant be competitive because of lost market share prior, So let fine the heck out of Intel to even the playing field. Great idea but were the ones who pay, again.

[Mergatroid Mania]

That's right. Before AMD Intel could charge whatever they liked for a CPU. Once AMD hit the market, it forced Intel to reduce their prices.

All I can say is that you Intel fanboys must be looking forward to paying more for your CPU if AMD goes under.

AMD makes good products are reasonable prices. Intel does now too, and you have AMD to thank for that.

[basshawg]

Intel will continue to monopolize and just pay the fines. It's been their way of doing business for years. The govenment can't afford to shut them down. They depend on the just like we do.

[mathieu.boonen]

Just another form of revenue gathering for the coffers by the DOJ, Death & Taxes there is nothing surer..

[jtjt145]

I am waiting for somebody sue the pants of Micro$oft for bundling their Windoze operating system onto pcmakers and thereby force-feeding it onto users.

[t8]

Intel, your'e going down for this.

[Garken]

Not one intelligent posting here at all. No one is looking at the big picture, just beating their gums about nothing.

[cloudmatt]

I'd say you had an intersting post, if you had made known your idea of the big picture. you sir are your own set of flapping gums with no substance

[micjackz]

So...Intel, Bill Gates (Microsoft), AIG, Merril Lynch, et. al. are criminals? GET OUT!

America marches on......

Justice or "Just Us"????

[zaabs]

part of this might because of the global foundries plant in malta ny